Skoda Targets Growth in Spain But Slips in China

MADRID – Skoda is challenging itself in Spain, where it is targeting a 20% increase in sales in 2020, but an executive says the Czech automaker will have continued difficulty in China.

A 20% sales boost would give Skoda a 3% share of the Spanish market next year compared with the current 2.3% based on about 29,000 deliveries, sales and marketing director Alain Favey says.

“It's a very ambitious goal, but I think it can be achieved,” he says.

A key element in Skoda’s 2020 plans will be the arrival of its Kamiq subcompact CUV, which Favey expects to account for at least 70% and perhaps up to 90% of the automaker’s sales in Spain.

Skoda enjoys 35% of the market in the Czech Republic where it is based, but its share in western Europe is 4.8% and is just 2% in Spain, France and Italy. Favey acknowledges Skoda faces stiff competition in Spain from local brand SEAT, like Skoda a member of the Volkswagen Group.

“SEAT leads the Spanish market and, of course, Skoda cannot aspire to compete with SEAT for that leadership, but it can aspire to sell more vehicles than it now sells,” he says.

One area where Favey sees growth potential is fleet sales. “In Germany, Austria and Switzerland we control 6% of fleet sales, but in Spain, we are far from that level and it is difficult for us to reach the rental companies, perhaps because our vehicles do not have an adequate residual value,” he says.

Skoda expects to sell 1.25 million cars worldwide this year, although sales are estimated to fall 4% mainly due to the first decline in Chinese demand in 30 years.

Meeting sales targets in China is complicated by the presence of some 600 different brands and increasing numbers of dealers who can’t be sufficiently supplied at current production levels – despite parent VW’s joint venture with major Chinese automaker SAIC. The JV produces VW-branded as well as Skoda models.

Skoda and SAIC are reviewing the Czech automaker’s product range, sales capacity of its dealers and the cost of its vehicles to cope with the current sales slump. Favey, moreover, is convinced “the Chinese car market will return to the path of growth it had maintained for so long.”

Favey believes Skoda could sell up to 100,000 more cars worldwide if it had enough production capacity. He says VW Group has assured him it plans to build a new plant that will assemble, among others, VW Passat and Skoda Superb models.

“This could mitigate our lack of production capacity but not immediately since it is not even known yet where that new plant will be built,” he says.

Favey also says Skoda is responding to tightening emissions regulations in Europe by looking to increase sales of cleaner cars.

“In 2019 the average CO2 emitted by Skoda cars has been 107 grams per kilometer; by 2020 we will have to inevitably reduce that figure to only 95 grams per kilometer,” he says. “What we have to do is sell more vehicles such as the pure-electric eCitigo, the Superb and Kodiac plug-in hybrids and the new pure-electric SUV that will be on the market at the end of 2020.”